EIN SSN LLC 1099?

[Matthew Post]

My father and I own 3 properties (6 units). Taxes are becoming more confusing each year as we have more properties, more repairs, contractors, interest, etc. What is the best way to file our taxes so everything is split evenly. Everything is 50/50. We have looked at starting an LLC or getting an EIN, but it all gets very confusing. Can we just get an EIN and use our SSNs to set it up?

[Jason Krejci]

Hey Matthew, I'm not sure I understand what you mean by using your ssn to set up an EIN but I think I get the gist. You generally get an EIN when you have some sort of business entity, be it a corporation, partnership or an LLC. The EIN is used for IRS purposes like filing a corporate tax return. LLCs, corps and the like are state created entities so if you are wanting an LLC it would be created at the state level. You would then request and EIN and specify the type of entity that you are for federal tax purposes.

In your example you want an LLC with a simple filing status and to split profits 50/50. The most simple thing is likely a muliti member LLC. When you apply for your EIN and designate it is a multi member LLC, you default to a federal filing status as a partnership. In a partnership, the IRS requires a form 1065 filed on an annual basis. This is a non taxable return that reports thr partnership income, expenses, etc. You and your father would then receive K-1s at the end of the year reporting your share of the profits. The K-1 income will then be reported on your form 1040.

I know this is a long winded answer, I hope it helps. You will also need to know what is required for state filings in the state you operate in. It is best to consult with a CPA/attorney before moving forward.